Course Allocation via Stable Matching

The allocation of students to courses is a wide-spread and repeated task in higher education, often accomplished by a simple first-come first-served (FCFS) procedure. FCFS is neither stable nor strategy-proof, however. The Nobel Prize in Economic Sciences was awarded to Al Roth and Lloyd Shapley for their work on the theory of stable allocations. This theory was influential in many areas, but found surprisingly little application in course allocation as of yet. In this paper, different approaches for course allocation with a focus on appropriate stable matching mechanisms are surveyed. Two such mechanisms are discussed in more detail, the Gale-Shapley student optimal stable mechanism (SOSM) and the efficiency adjusted deferred acceptance mechanism (EADAM). EADAM can be seen as a fundamental recent contribution which recovers efficiency losses from SOSM at the expense of strategy-proofness. In addition to these two important mechanisms, a survey of recent extensions with respect to the assignment of schedules of courses rather than individual courses is provided. The survey of the theoretical literature is complemented with results of a field experiment, which help understand the benefits of stable matching mechanisms in course allocation applications.     

Political problems of the southward extension

The inclusion of Greece, Spain and Portugal in the European Community will result in grave consequences for the old members of the EC as well as for the acceding states. Which are the advantages expected from the southward extension and which problems are likely to arise?     

Virtual Currencies,the Money Market,and Monetary Policy

Virtual currencies are in vogue mainly due to two factors. First, as a protest against authority-driven monetary policy decisions and second, as alternatives to deficits in some monetary systems arising out of political instability or other causes. Assuming that virtual currencies indeed (partially) replace national currencies as payment vehicles, we attempt, in this article, to integrate the virtual currency supply and demand into the Keynesian money market framework. This article presents a few results for the central banks and outlines problems that may result for monetary policy formulation. Since this is the first such attempt to model a national money market as a combination of nationally-issued currency and globally-issued virtual currency, certain simplistic assumptions have been made. Nevertheless, the model offers directions on the impact of virtual currencies on the monetary system and the national money market. Additionally, the paper integrates the official standpoints of the European Central Bank and the Bank of England on this topic.     

Subjective beliefs and economic preferences during the COVID-19 pandemic

Experimental Economics - The COVID-19 pandemic presents a remarkable opportunity to put to work all of the research that has been undertaken in past decades on the elicitation and structural...     

Me or information technology? Adoption of artificial intelligence in the delegation of personal strategic decisions

Artificial intelligence is revolutionizing the way we do business. Whereas both the adoption of technological innovations and strategic decision making have been subject to prior research, this experimental study is first to combine both. To understand the impact of choice complexity and cognitive perceptions on the willingness to delegate a strategic decision to an algorithm, we conducted an experiment with 310 participants. We find that although choice complexity has no effect, participants with low levels of situational awareness are more likely to delegate. The findings augment research on choice complexity in decision making by emphasizing the relevance of cognitive perceptions.     

Tax contracts and elections

In this paper we examine the impact of tax contracts as a novel institution on elections, policies, and welfare. We consider a political game in which three parties compete to form the government and voters may behave strategically. Parties have policy preferences about the level of public-good provision and benefit from perks when in office. A government raises taxes for both purposes. We show that tax contracts yield moderate policies and lead to lower perks by avoiding the formation of grand coalitions in order to win government. Moreover, in polarized societies they unambiguously improve the welfare of the median voter.     

Global private information in international equity markets

This paper studies international equity markets when some investors have private information that is valuable for trading in many countries simultaneously. We use a dynamic model of equity trading to show that global private information helps explain US investors’ trading behavior and performance. In particular, the model predicts global return chasing (positive co-movement of US investors’ net purchases with returns in many countries) which we show to be present in the data. Return chasing in our model can be due to superior performance of US investors, not inferior knowledge or naive trend-following. We also show that trades due to private information are strongly correlated across countries. A common (global) factor accounts for about half their variation.